How tech taxes became world’s hottest economic debate

WASHINGTON — A growing movement by foreign governments to tax American tech giants that supply internet search, online shopping and social media to their citizens has quickly emerged as the largest global economic battle of 2020.

The fight pits traditional allies against each other, with European countries like France, Italy and Britain clashing with the US over their plans to impose new taxes on digital services provided by companies like Amazon and Google.

At the core of the debate are fundamental questions about where economic activity in the digital age is generated, where it should be taxed and who should collect that revenue. The potential for large tax dollars has spurred governments across the world to consider new digital taxes and has even inspired lawmakers in some American states, like Maryland and New York, to propose their own levies on digital trade.

This week, national leaders meeting in Davos, Switzerland, brokered a truce between the US and France, which had planned to move ahead with a digital services tax. Officials in both countries said they would pause what had been an escalating dispute in order to give international negotiators a chance to reach a global tax agreement that could halt a proliferation of digital taxes.

But the meetings, which took place at the World Economic Forum, have also brought new threats of taxation and tariff retaliation and underscored how fragile negotiations remain.

The stakes are high for governments and multinational corporations — even those outside the tech sector. The digital tax negotiations, which are being conducted through the Organization for Economic Cooperation and Development, have become entwined with efforts to reduce attempts by companies to avoid taxes by shifting profits overseas.

Late last year, negotiators at the OECD, including a delegation from the Trump administration, agreed to a first-step framework that would allow countries to tax certain digital-service providers even if they did not have physical presences inside their borders.

But Treasury Secretary Steven Mnuchin quickly surprised OECD officials with a letter requesting a change to the framework, one that would effectively allow some U.S. companies to opt out of those taxes. OECD officials pushed back, and negotiators are set to meet again next week in Paris.

The discussions, which are expected to last months, could end with an agreement on a global minimum tax that all multinational companies must pay on their profits, regardless of where the profits are booked. The negotiations could also set a worldwide standard for how much tax companies must remit to certain countries based on their digital activity.

Mnuchin expressed frustration Thursday in Davos that a digital sales tax had become such a focus of discussion at the World Economic Forum. Setting a minimum tax for companies around the world, to prevent them from hiding profits in tax havens, will make a much bigger difference, he said.

“From my perspective, that is by far the more important,” he said.

There is a chance the talks could devolve into a “Wild West” array of separate tax regimes on digital activity around the world.

“It’s a big old mess,” said Jennifer McCloskey, vice president for policy at the Information Technology Industry Council, a trade group that represents companies including Apple, Oracle and several other American tech leaders. “But,” she added, “that’s to be expected.”

Companies that operate across borders have long paid taxes where their profits are booked. Calculating that sounds simple enough, but it has grown increasingly complicated in recent decades. To reduce their tax bills, corporations have shifted profits — and in some cases their headquarters — on paper to low-tax countries like Bermuda and Ireland. OECD countries like the US have agreed to measures meant to discourage such shifting.

Such efforts did not resolve some countries’ complaints about Facebook, eBay and other companies that offer online services to their residents but have little or no physical presence within their borders. Those governments, along with leaders of the European Union, say large tech companies are avoiding paying their fair share of taxes.

“They’re looking for new ways to raise revenue,” said Nicole Kaeding, an economist and vice president of policy promotion at the National Taxpayers Union Foundation, which opposes the digital tax push by countries and states. “These are all wrapped up in the questions of how do we adjust a tax system that is a hundred years old in order to tax the digital economy?”

Kimberly Clausing, an economist at Reed College in Portland, Oregon, who specializes in international taxation and has pushed for additional measures to tax corporate profits around the world, said the digital tax effort exposed political and economic tensions in wealthy nations.

“It really lays bare this fiction that economic value is something we can assign to a location,” Clausing said. “As more and more of the value is intangible, it really creates this opportunity for profit-shifting.”

The proliferation of profitable digital services makes it “really the time” for the international community to revisit the rules of corporate taxation across borders, she said.

The feud between French and US officials has sped up the OECD process to rewrite those rules, which has a deadline for completion at the end of this year.

France announced plans last year to impose a 3 percent tax starting Jan. 1 on the revenues that companies earn from providing digital services to French users. The government estimated a windfall of 500 million euros (about $563 million). Similar taxes are under consideration in Britain, Italy, Canada and a host of other wealthy nations.

Those moves have drawn criticism, and tariff threats, from the Trump administration. President Donald Trump has insisted that only the US may tax American-based companies — even though American multinationals already pay taxes in other countries where they have factories or other physical operations. The president threatened to retaliate against France with US tariffs of up to 100 percent on French wine, cheese, handbags and other goods.

This week, Mnuchin also threatened tariffs against Italy and Britain if they impose similar taxes. British Chancellor Sajid Javid, who is also in Davos, said Britain would push ahead with the tax regardless.

Despite the acrimony, there are signs of progress. France’s finance minister, Bruno Le Maire, said Wednesday that the US and France had found a path forward in the OECD negotiations to set digital taxes.

The French agreed to suspend collections of their new digital tax, and the US agreed to hold off on tariffs, giving negotiators at the OECD time to strike their deal.

Le Maire made clear that the digital tax issue was far from resolved, and talks were expected to continue Thursday.

“We need to address fiscal evasion,” he said. “We have to address the fact that the biggest companies in the world are making huge profits in Europe and everywhere in the world without paying the due level of taxation because they do not have any physical presence — we have to address that question.”

Some observers are skeptical that the process can produce consensus — from some 130 countries — by year’s end.

“Some countries are going to have to give up taxing rights in order to allow other countries to have them. And the question is: Who?” said J. Clark Armitage, a former IRS official and the president of the tax firm Caplin & Drysdale in Washington. “It’s going to be hard to pass something that tracks what they propose.”

Negotiators face intense and competing pressures from large multinational companies. American tech firms are eager for a deal that would prevent multiple countries from imposing a wide variety of taxes on their activities.

“The worst case would be triple, quadruple taxation, because of how the individual taxes are not aligned,” said Jordan Haas, trade director for the Internet Association, another tech trade group in Washington.

Other companies, like consumer products giant Johnson & Johnson, have urged negotiators to go slow in considering the global minimum tax proposal that the OECD is discussing — and that French officials say must be included in any final agreement.

EU officials are already looking at reviving their own proposal to significantly revamp how the companies are taxed in the 28-nation bloc in the event that the OECD discussions fail. On Wednesday, an EU official said leaders were waiting to see whether Trump administration negotiators engaged more aggressively in the discussions and showed a willingness to work with Congress to carry out any consensus solution that emerged from the talks.

“We’re pleased” with the progress announced in Davos, the official said. “At the same time, we’re skeptical.”


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Huawei boss says US may 'escalate,' stays confident on business

DAVOS, Switzerland -- The chief executive of Chinese telecoms giant Huawei on Tuesday said he was ready for the United States to escalate a "campaign" against the firm this year but insisted it would not have a significant effect on business.

The comments by Huawei chief executive and founder Ren Zhengfei to business leaders at the World Economic Forum in Davos come amid a bitter court fight in Canada over a US demand to extradite Huawei's chief financial officer Meng Wanzhou, who is his eldest daughter.

Huawei, the global leader in telecom networking equipment, has also been effectively banned by the United States from working with American firms on the grounds that it poses a national security threat -– an accusation the company has consistently denied.

"This year, the US might escalate their campaign against Huawei, but I think the impact on Huawei business will not be very significant," Ren told a session at Davos.

He said the company had invested intensely in protecting itself and was well-prepared this year.

"That's why we could withstand the first round of attack. In the year 2020, since we already have this experience from last year, we are more confidant that we can survive, even further attacks," he added.

USED TO BEING NUMBER ONE

Meng Wanzhou went to court on Monday to fight extradition to the United States, with her lawyers calling the accusations against her "fiction".

The US alleges Meng lied to HSBC Bank about Huawei's relationship with its Iran-based affiliate Skycom, putting the bank at risk of violating US sanctions against Tehran.

Meng has denied the allegations. She has been out on bail, living in one of her two Vancouver mansions for the past year.

Ren has previously suggested that the case was part of a US plot to crush Huawei, seeing it as a security risk.

Huawei said in December that "survival" was its top priority after announcing 2019 sales were expected to fall short of projections as a result of US sanctions.

Washington has banned US companies from selling equipment to Huawei, locking out the smartphone giant from access to Google's Android operating system.

"The United States… it is used to being the world number one and if someone is better than them, they might not feel comfortable," said Ren.

He said Huawei "used to be" an admirer of the United States and had notably been inspired by American management systems.

"From that perspective, the US should not be overly concerned about Huawei and Huawei's position in the world."

Agence France-Presse

Gender workplace equality 257 years away: WEF

GENEVA — Women may have to wait more than 2 centuries for equality at work, according to a report on Tuesday showing gender inequality growing in workplaces worldwide despite increasing demands for equal treatment. 

While women appear to be gradually closing the gender gap in areas such as politics, health and education, workplace inequality is not expected to be erased until the year 2276, according to a report published by the World Economic Forum (WEF).

The organization, which gathers the global elite in the plush Swiss ski resort of Davos each year, said that the worldwide gender gap in the workplace had widened further since last year, when parity appeared to be only 202 years off. 

The Geneva-based organisation's annual report tracks disparities between the sexes in 153 countries across four areas: education, health, economic opportunity and political empowerment. 

The overall gender gap across these categories has shrunk, Tuesday's report showed, with WEF now forecasting it will take 99.5 years for women to achieve parity on average, down from the 108 years forecast in last year's report.

But while some sectors have shown improvements, others lag far behind. 

General parity "will take more than a lifetime to achieve," WEF acknowledged in a statement.

40 PERCENT WAGE GAP 

WEF said the gender gap was more than 96 percent closed in the area of education and could be eliminated altogether within just 12 years.

The gap was equally small in the health and survival category, but the WEF report said it remained unclear how long it would take to achieve full parity in this domain due to lingering issues in populous countries like China and India.

Politics meanwhile is the domain where the least progress has been made to date, but it showed the biggest improvement in the past year.

Women in 2019 held 25.2 percent of parliamentary lower-house seats and 22.1 percent of ministerial positions, compared to 24.1 percent and 19 percent in 2018.

But when it comes to the workplace, the picture is less rosy. 

The report, which looked at a variety of factors including opportunity and pay, said it would take 257 years before there was equality in the workplace. 

It highlighted positive developments, like a general increase in the share of women among skilled workers and senior officials.

But it stressed that this trend was counterbalanced by "stagnating or reversing gaps in labor market participation and monetary rewards".

On average, only 55 percent of adult women are in the labor market today, compared to 78 percent for men, while women globally on average still make 40 percent less than men for similar work in similar positions.

The wage gap has been steadily shrinking in OECD countries over the past decade, but it has at the same time expanded in emerging and developing economies, the WEF report showed.

GLOBAL DISPARITIES 

Progress across the categories varies greatly in different countries and regions.

The report pointed out that while Western European countries could close their overall gender gap in 54.4 years, countries in the Middle East and North Africa will take nearly 140 years to do so.

Overall, the Nordic countries once again dominated the top of the table: men and women were most equal in Iceland, followed by Norway, Finland and Sweden.

Syria, Pakistan, Iraq and finally Yemen showed the biggest overall gender gaps of the countries surveyed.

Among the world's 20 leading economies, Germany fared the best, taking 10th place, followed by France at 15th, South Africa at 17th, Canada at 19th and Britain at 21st.

The United States continued its decline, slipping two places to 53rd, with the report pointing out that "American women still struggle to enter the very top business positions", and are also "under-represented in political leadership roles".

Agence France-Presse 

John Kerry to Trump: 'Resign'

DAVOS, Switzerland - Former US secretary of state John Kerry said Tuesday he was not ruling out another tilt at the White House in 2020 but that in the here and now, Donald Trump should quit.

"I've told people I have not taken it off the table, but I'm not sitting around actively planning a (2020) campaign, or doing something, no," Kerry, 75, told CNBC television at the World Economic Forum in Davos.

Kerry was the Democrats' defeated candidate in 2004 and if he did pursue a long-shot bid again, he would join a growing field from his party. 

On Monday, Senator Kamala Harris entered the fray, bidding to become the first African-American woman to hold the presidency.

On current affairs, Kerry said the government shutdown in Washington -- triggered by President Trump's demands for a border wall -- was "utterly disgraceful" and "embarrassing for our country".

Trump was guilty of "lies", not least over the Paris climate accord, Kerry added during a discussion with UN oceans envoy Peter Thomson and Rebecca Shaw, chief scientist for environmental group WWF.

Asked what message he would give Trump were the president sitting opposite him, Kerry said to laughter: "Resign."

jit/jj

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Philippines is world's 8th best in gender equality, top in Asia: report

MANILA- The Philippines remains as one of the most gender equal countries worldwide with equal opportunities on political and economic leadership for men and women, a World Economic Forum (WEF) report showed.

Manila ranked 8th in this year's Global Gender Gap report, higher by 2 notches from last year's ranking. It was the only Asian country in the top 10.

Iceland was hailed as the most gender-equal country this year, followed by Norway, Sweden, Finland and Nicaragua, respectively.

Other countries that made it to the top 10 are Rwanda at 6th, New Zealand at 7th, Ireland at 9th, and Namibia at 10th.

Since the report was launched in 2006, the Philippines has consistently been in the top 10, with the WEF attributing this year's rise to "full parity" on political and economic leadership.

The WEF also noted that the Philippines was near to closing 80 percent of its overall gender gap, the "highest value" for the country ever recorded by the index.

The Philippines also recorded a closer gender gap in terms of economic participation and opportunity due to an increase in wage equality for similar work, the WEF said.

In terms of educational attainment, the Philippines ranked first, meaning it has fully closed the gender gap, along with Canada, France, and New Zealand among others.

The report, however, noted that Manila needs to improve in closing the gender gap in its health and survival category.

Worldwide, the report noted that the global gender gap across a range of areas will not close for another 108 years. The gender gap in the workplace meanwhile will take over 2 centuries more to close.

Released on Tuesday, the 2018 Global Gender Gap Report benchmarked 149 countries on their progress towards gender parity based on political empowerment, labor force participation, educational attainment, and health and survival.

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US tops global competitiveness rating, despite 'worrying' trends: WEF

GENEVA - The United States has the world's most competitive and innovative economy, a World Economic Forum ranking showed Wednesday, after a methodology shift helped unseat Switzerland after nearly a decade on top.

The organisation that hosts the annual Davos pow-wow of business and political elites said it used a new methodology for the 2018 edition of its annual Global Competitiveness Report to reflect shifts in a world increasingly transformed by new, digital technologies.

This year's report studied how 140 economies fared when measured against 98 indicators organised into 12 pillars, including institutions, infrastructure, macroeconomic stability, business dynamism and innovation capability.

"The United States achieves the best overall performance," WEF said in a statement.

'INNOVATION POWERHOUSE' 

"They're an innovation power house," Saadia Zahidi, a member of the WEF's managing board, told AFP. 

"They do well in terms of labor markets, they do well in terms of market size, they do fairly well in terms of institutions," she said.

When asked if President Donald Trump could take credit for the ranking, Thierry Geiger, head of analytics and quantitative research at WEF, stressed that most of the data used in the report was from before Trump came to power last year.

"The things we capture are long-term drivers," he told reporters.

Zahidi meanwhile said "there are also a lot of worrying signs" for US competitiveness.

She pointed to the country's low score in terms of participation by women in the labor force, where it ranked 37th, as well as 40th place in terms of press freedom.

WEF also stressed the "importance of openness for competitiveness," including low-tariff and non-tariff barriers to trade and ease of hiring foreign labor.

"The data suggest that global economic health would be positively impacted by a return to greater openness and integration," WEF said.

Overall, the United States scored an average of 85.6 points when the nearly 100 indicators were measured on a scale of 0 to 100, and was followed by Singapore and Germany.

Switzerland meanwhile landed in fourth place, with a score of 82.6, after nine years at the top of the WEF ranking. 

On average, countries around the world scored 60 points on the ranking -- a full 40 points away from what WEF considers the optimal conditions for a competitive economy.

WEF founder Klaus Schwab said understanding and being open to the technologies driving the so-called "fourth industrial revolution" was vital to a country's competitiveness.

"I foresee a new global divide between countries who understand innovative transformations and those that don't," he said in a statement.

Zahidi however stressed that "technology is not a silver bullet on its own."

"Countries must invest in people and institutions to deliver on the promise of technology."

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Trump touts 'America First' to skeptical Davos elite

DAVOS - President Donald Trump strode into the lion's den to confront the world's political and business elite on Thursday, as his "America First" administration executes an anti-globalist manifesto in trade, taxes and currency rates.

A year after taking office, Trump joined the World Economic Forum in Davos with foreign exchange markets in turmoil and Washington's trading partners in uproar.

Vying to take the air out of one storm, he insisted that he wants to see "a strong dollar," after comments by his treasury secretary appearing to signal the opposite sent the US currency plunging to three-year lows and provoked anger in Europe.

Trump smiled and waved on his arrival at the gathering in the Swiss Alps, as crowds of onlookers held up camera phones. One woman admirer grabbed Trump's autograph while other delegates muttered -- out of his earshot -- about wanting to pelt him with fruit.

The former property mogul held one-on-one meetings with the British and Israeli prime ministers. Then, having demonized the globalist Davos crowd on his unorthodox march to the White House, he went on to a gala reception and dinner with European business chiefs attending the gathering.

Interviewed on CNBC, Trump said there was no contradiction between his populist campaign and his decision to come to the headquarters of the global elite.

"When I decided to come to Davos, I didn't think in terms of elitist or globalist, I thought in terms of lots people that want to invest lots of money and they're all coming back to the United States, they're coming back to America," he said.

Basking in near-daily highs on Wall Street and accelerating US growth, he added: "It's about coming to America, investing in money, creating jobs, companies coming in, we're setting records every week, every day, we're setting records."

ANTI-TRUMP MESSAGES

Seeking to demonize the president in turn was Swiss activist group Campax, which hung a giant banner on an Alpine peak near Davos reading "Trump not welcome", and Greenpeace, which beamed anti-Trump laser messages onto another mountain.

Trump is due to address the forum on its closing day Friday, at the end of a week that saw his administration announce a new package of trade tariffs targeting China and South Korea, and spark upheaval on the currency markets.

"I think the most fascinating thing with President Trump is that he has the capacity to surprise, and I'm sure we will be surprised tomorrow," Alexander Stubb, former prime minister of Finland and the new vice president of the European Investment Bank, told AFP in Davos.

FOREX ROWS 

Traders and US partners already had one surprise in Davos this week when Treasury Secretary Steven Mnuchin appeared to back away from decades of support by his predecessors for a "strong dollar" policy. He declared "a weaker dollar is good for us", flouting US commitments in international fora such as the G20.

International Monetary Fund chief Christine Lagarde on Thursday urged Mnuchin to "clarify" his stance on the dollar. European Central Bank head Mario Draghi reminded trading partners to "refrain" from language that could cause currency volatility.

A weak dollar would potentially boost US exporters but cause headaches for all other trading nations.

In comments to CNBC that helped the dollar recover some lost ground, Trump said Mnuchin had been misquoted.

The Treasury secretary told reporters Thursday: "We are not concerned with where the dollar is in the short term, it is a very liquid market and we believe in free currencies."

But Mnuchin's apparently hands-off approach was taken as reinforcing a broad offensive in trade built on the "America First" platform,.

It drew the ire of French Finance Minister Bruno Le Maire.

"We want exchange rates to reflect economic fundamentals... and we shouldn't play with these rates," Le Maire said in Davos.

Business leaders in Davos have this week offered a broad welcome to controversial tax reforms enacted by Trump's Republicans, which slashed the headline rate of US corporate tax. But European political leaders fear a "race to the bottom" as the United States jockeys for an edge among foreign investors.

NICE OR NASTY 

A year ago, the Davos spotlight was claimed by China's communist leader Xi Jinping, who took up the torch of global trade to the delight of the well-heeled audience then anxious about Trump's inauguration.

The Davos elite are keen now to see which version of Trump will speak on Friday -- the business-friendly tycoon or the leader who berated the rest of the world at the UN General Assembly last September.

"I think they've already built down their expectations so far that anything he may say that's conciliatory, they'll be grateful for," Robert Kaplan, senior fellow at Washington's Center for a New American Security, told AFP at the forum.

French President Emmanuel Macron and German Chancellor Angela Merkel "stole the show" at Davos already, Kaplan added, after the European leaders used separate speeches on Wednesday to push back hard against the Trump manifesto.

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Trudeau takes shot at Trump protectionism at Davos forum

DAVOS, Switzerland - Canadian Prime Minister Justin Trudeau criticized the protectionist policies of US President Donald Trump at the World Economic Forum in Davos on Tuesday while fervently defending the virtues of free trade.

In a speech alluding to Trump and his threat to pull the United States out of the North American Free Trade Agreement, Trudeau said his administration was "working very hard to make sure that our neighbor to the south recognizes how good NAFTA is, and that (NAFTA) has benefited not just our economy, but his economy and the world's economy."

Earlier Canada agreed at talks in Tokyo to join 10 other countries in resurrecting the Trans Pacific Partnership, now called the CPTPP.

This came on the heels of a free trade deal with Europe and amid difficult negotiations with the United States and Mexico to revamp the 1994 North American Free Trade Agreement.

"The agreement reached in Tokyo today is the right deal," Trudeau said, adding that the CPTPP deal marked "a great day for progressive trade around the world."

In addition to Canada, the CPTPP includes 10 countries: Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Canada, which is the second-largest economy in the CPTPP, had walked away from a deal on the trade pact last November, holding out to maintain environmental and labor protections linked to freer markets.

A Canadian government official said "significant progress on the sticking points" had been made.

The agreement, said Trudeau, is now "more progressive and stronger for Canadian workers in the fields of intellectual property, culture and the auto industry".

At the same time, the prime minister raised concerns about a growing backlash against globalization.

"We're seeing a lot of trade skepticism around the world in general right now," he said.

"People are worried or become increasingly convinced that trade deals benefit the few, not the many, benefit a country's bottom line, benefit multinationals, but don't benefit ordinary workers."

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Davos paper attacks Trump's views on trade

GENEVA—US President Donald Trump's view of world trade will be challenged next week when he visits the World Economic Forum (WEF) at Davos, judging by a paper seen by Reuters on Wednesday that is aimed squarely at his "America First" stance.

The "Strategic Brief on Misconceptions around Trade Balances" issued by the WEF's network of trade experts did not mention Trump by name. But it took issue with his administration's understanding of international commerce.

"A widely held view is that a country's trade balance is a key measure of its international commercial success," said co-authors Harvard professor Robert Lawrence and Princeton fellow Yeling Tan in the paper, which is due to be presented and debated at Davos.

"Currently, invoking this reasoning, the administration is seeking to reduce the trade deficit by renegotiating U.S. trade agreements and adopting more protectionist U.S. policies."

Trump has railed against the U.S. trade deficit with China, hobbled the World Trade Organization by blocking judicial appointments, pulled out of the Trans-Pacific Partnership trade talks and antagonized Canada and Mexico by demanding a revamp of the North American Free Trade Agreement.

The Davos paper said Trump's administration believed "unfair" trade had led to large trade deficits and job losses, but policies based on such thinking could end up harming the people they aimed to help.

The authors said similar narratives had also emerged in other countries and regions but did not name them.

They set out seven examples of sloppy thinking on trade, illustrated by graphs showing that the relationship between imports and U.S. domestic employment had been "overwhelmingly positive" and that larger U.S. trade deficits had been associated with faster jobs growth.

The first example was that "trade deficits are bad, trade surpluses are good". Both deficits and surpluses may be bad or good, and the trade balance was a function of national saving and investment, not trade policies.

Other examples were "imports are the cause of the decline in manufacturing jobs" and "trade agreements will increase the deficit".

Trump's Jan. 26 speech at Davos comes as his administration prepares for a penultimate round of NAFTA talks and as he considers imposing broad restrictions on steel and aluminum imports, a policy which is aimed at China but risks rebounding on the European Union.

It was wrong to think that imposing a tax on imports would create manufacturing jobs, the Davos paper said.

"New barriers to trade could disrupt production and reduce rather than increase domestic employment in both the protected industries and those that use their outputs." (Reporting by Tom Miles, editing by Larry King)

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Trump to bring 'America First' to World Economic Forum

WASHINGTON - Donald Trump will take his populist message directly to the world's political and business elite later this month, becoming the first US president to attend the World Economic Forum in Davos in nearly 20 years.

Trump -- who ran for president on a nationalist "America First" platform -- will mingle at the annual Alpine festival of globalism in Switzerland, and perhaps offer a few views of his own, the White House said.

"The president welcomes opportunities to advance his America First agenda with world leaders," White House spokeswoman Sarah Sanders said.

"At this year's World Economic Forum, the president looks forward to promoting his policies to strengthen American businesses, American industries and American workers."

A string of US presidents have avoided attending the annual upscale event, fearing a sojourn to a European ski resort would make them look out of touch.

The last president to go was Bill Clinton, who attended in 2000.

The gathering might seem antithetical to Trump's brand of politics, but the White House insists his message will be the same surrounded by chalets as it would be in Washington.

LOOKING TO MAKE HIS MARK?  

Trump, a real estate mogul-turned-president, has rarely shied away from the rich and famous, but may have additional geopolitical incentive to attend.

Last year, the forum was dominated by the appearance of Chinese President Xi Jinping.

Xi became the first Chinese leader to go, picking up the mantle of defender of free trade and globalization in the face of Trump's protectionist rhetoric.

"No one will emerge as a winner in a trade war," Xi warned, fueling a sense of rapidly growing China stepping into a space vacated by the United States.

During a decades-long spending spree, China has bankrolled infrastructure projects from Sri Lanka to Zambia, often earning political influence in the process.

Last year, the Trump administration was represented by informal emissary Anthony Scaramucci, who challenged Beijing to match words and deeds.

Firms were also quick to point out the gap between Xi's rhetoric and the realities of doing business in China, which is a frequently tortuous affair.

'AMERICA FIRST'   

But it is unclear how Trump's pitch for "America First" trade will play among the disciples of a global rules-based order.

"The question appears to be whether he'll play to the global Davos audience or use his speech to shock the crowd with the anti-globalization rhetoric he loves to use back home," said Scott Mulhauser, former chief of staff at the US Embassy in Beijing.

"The two sides of Trump stand in particular contrast on trade and globalization and may even both appear in the same speech," added Mulhauser.

"So this one should be fascinating -- and the signals he sends will be heard at home and across the globe."

Since coming to office in January 2017, Trump has ripped up or sought to renegotiate a series of trade pacts that underpin global commerce.

A series of investigations into Chinese trade practices have put his administration on a collision course with Beijing.

This year's Davos gathering takes place January 23-26, with a theme of "Creating a Shared Future in a Fractured World."

It is not yet clear when precisely Trump will attend.

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Macron-style reforms key to growth: World Economic Forum

GENEVA, Switzerland - Policies promoting labor force flexibility, like those pushed through by French President Emmanuel Macron, are key to fostering a competitive economy, the World Economic Forum said in its flagship report on Wednesday.

The Forum's annual Global Competitiveness Report studies a dozen indicators from nations across the globe to assess their growth prospects.

Perennial winner Switzerland remained atop this year's list, with regular front-runners the United States, Singapore, the Netherlands and Germany rounding out the top 5.

But Forum economists told reporters that a key finding this year was that labour force flexibility, combined with worker protection, were vital, arguing that both can be achieved simultaneously.

"Competitiveness is enhanced, not weakened by combining degrees of flexibility within the labour force with adequate protection of workers rights," the Forum said in a statement.

The report's launch comes as French labor unions and leftist leaders mobilize for what they say will be a lengthy battle against Macron's labor law changes.

Macron's signature reforms aim to give businesses more freedom to negotiate conditions with workers, while also making it easier to fire people and giving higher payouts to those made redundant.

"I think in the case of France, what we have seen ... is too much rigidity in the labor market, which in these times of rapid change prevent the evolution of the economy," Thierry Geiger, the head of research in the Future of Economic Progress department at the Forum told AFP.

"We advocate for flexibility but combined with a safety net," he added.

Geiger argued that countries like Switzerland and Denmark had proven there was "no tradeoff" between labor force flexibility and worker protection.

Investing in retraining and unemployment benefits should be a part of the policy mix, the report said.

Richard Samans, a Forum managing board member and former economic adviser to president Bill Clinton's US administration, applauded moves in France toward "greater flexibility" but cautioned that labor leaders needed to be part of any transition process.

France languished in 22nd place on the competitiveness index, falling one place from last year.

Globally, there were no big movers in this year's competitiveness rankings, unlike past reports that have seen Asian giants like India make major strides.

The Geneva-based World Economic Forum is best known for hosting an annual gathering of the global power-players at the Swiss Alpine resort Davos and has been criticized by some for celebrating the influence of elites.

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Here come the robots: Davos bosses brace for big tech shocks

DAVOS, SWITZERLAND - Implantable mobile phones. 3D-printed organs for transplant. Clothes and reading-glasses connected to the Internet.

Such things may be science fiction today but they will be scientific fact by 2025 as the world enters an era of advanced robotics, artificial intelligence and gene editing, according to executives surveyed by the World Economic Forum (WEF).

Nearly half of those questioned also expect an artificial intelligence machine to be sitting on a corporate board of directors within the next decade.

Welcome to the next industrial revolution.

After steam, mass production and information technology, the so-called "fourth industrial revolution" will bring ever faster cycles of innovation, posing huge challenges to companies, workers, governments and societies alike.

The promise is cheaper goods and services, driving a new wave of economic growth. The threat is mass unemployment and a further breakdown of already strained trust between corporations and populations.

"There is an economic surplus that is going to be created as a result of this fourth industrial revolution," Satya Nadella, chief executive of Microsoft, told the WEF's annual meeting in Davos on Wednesday.

"The question is how evenly will it be spread between countries, between people in different economic strata and also different parts of the economy."

Robots are already on the march, moving from factories into homes, hospitals, shops, restaurants and even war zones, while advances in areas like artificial neural networks are starting to blur the barriers between man and machine.

One of the most in-demand participants in Davos this year is not a central banker, CEO or politician but a prize-winning South Korean robot called HUBO, which is strutting its stuff amid a crowd of smartphone-clicking delegates.

But there are deep worries, as well as awe, at what technology can do.

A new report from UBS released in Davos predicts that extreme levels of automation and connectivity will worsen already deepening inequalities by widening the wealth gap between developed and developing economies.

“The fourth industrial revolution has potentially inverted the competitive advantage that emerging markets have had in the form of low-cost labor,” said Lutfey Siddiqi, global head of emerging markets for FX, rates and credit at UBS.

“It is likely, I would think, that it will exacerbate inequality if policy measures are not taken.”

An analysis of major economies by the Swiss bank concludes that Switzerland is the country best-placed to adapt to the new robot world, while Argentina ranks bottom.

WINNERS AND LOSERS

There will be winners and losers among companies, too, as new players move into established industries with disruptive new technologies.

That is something uppermost in the minds of Davos attendees such as General Motors CEO Mary Barra, who is confronting the threat of driverless cars - another science fiction that has become science fact - or bank boss Jamie Dimon at JPMorgan Chase, facing competition from digital "fintech" start-ups.

Such innovations, coupled with the rise of robots in both the manufacturing and service sectors, could automate vast numbers of jobs. Oxford University researchers predicted in 2013, for example, that 47 percent of U.S. jobs were at risk.

Such fears about technology destroying jobs are not new. The economist John Maynard Keynes famously cried wolf in 1931, by issuing a warning of widespread "technological unemployment".

The question is whether this time will be different, given the speed to change and the fact that machines now offer brain as well as brawn, threatening professions previously seen as immune, such as entry-level journalism or routine financial analysis.

Pessimists fear this will hollow out middle-income, middle-class jobs on an unprecedented scale, with the WEF itself predicting that more than 5 million jobs could be lost in 15 major economies by 2020.

But ManpowerGroup CEO Jonas Prising is more upbeat for the long term. "If history is any indicator, we'll have more jobs being created in the end than are going to be destroyed," he said.

However, beyond the Davos talking-shop there are doubts about how well business leaders will actually plan for the future.

"When you have these very big levels of disruptive change you need some pretty serious thinking and action," said Ian Goldin, professor of globalization and development at Oxford University.

"But the CEO who really looks years ahead and looks at broader social issues is rare, even in Davos."

source: www.abs-cbnnews.com

Richest 62 people own same as half world's population - Oxfam

LONDON - The wealthiest 62 people now own as much as half the world's population, some 3.5 billion people, as the super-rich have grown richer and the poor poorer, an international charity said on Monday.

The wealth of the richest 62 people has risen by 44 percent since 2010, while the wealth of the poorest 3.5 billion fell 41 percent, Oxfam said in a report released ahead of the World Economic Forum's annual meeting in Davos, Switzerland.

Almost half the super-rich individuals are from the United States, 17 from Europe, and the rest from countries including China, Brazil, Mexico, Japan and Saudi Arabia.

"World leaders' concern about the escalating inequality crisis has so far not translated into concrete action - the world has become a much more unequal place and the trend is accelerating," Oxfam International's executive director, Winnie Byanima, said in a statement accompanying the report.

"We cannot continue to allow hundreds of millions of people to go hungry while resources that could be used to help them are sucked up by those at the top," Byanima added.

About $7.6 trillion of individuals' wealth sits in offshore tax havens, and if tax were paid on the income that this wealth generates, an extra $190 billion would be available to governments every year, Gabriel Zucman, assistant professor at University of California, Berkeley, has estimated.

As much as 30 percent of all African financial wealth is held offshore, costing about $14 billion in lost tax revenues every year, Oxfam said, referring to Zucman's work.

This is enough money to pay for healthcare that could save 4 million children's lives a year, and employ enough teachers to get every African child into school, Oxfam said in its report.

"Multinational companies and wealthy elites are playing by different rules to everyone else, refusing to pay the taxes that society needs to function. The fact that 188 of 201 leading companies have a presence in at least one tax haven shows it is time to act," Byanima said.

Ensuring governments collect the taxes they are owed by companies and rich individuals will be vital if world leaders are to meet their goal to eliminate extreme poverty by 2030, one of 17 Sustainable Development Goals set in September, Oxfam said.

EXTREME POVERTY FALLING

The number of people living in extreme poverty has fallen by 650 million since 1981, even though the global population grew by 2 billion in that time, according to the Organisation for Economic Co-operation and Development (OECD).

Much of this change has been because of the rise of China, which alone accounted for half a billion people moving out of extreme poverty.

Most of the world's poorest no longer live in the poorest countries, but in middle-income countries like India, the OECD said in a recent report.

The inequalities are partly to do with differences in income, especially between urban and rural areas, but also differences in access to healthcare, education and jobs, the OECD said.

"The figures suggest that the biggest causes of poverty are ... political, economic and social marginalization of particular groups in countries that are otherwise doing quite well," development economist Owen Barder is quoted as saying in the OECD report.

Barder is director for Europe at the Center for Global Development.

Although taxes and transfers help reduce income inequality in developed countries, these systems are less robust in many developing countries, according to the OECD.

An exception is Brazil, which makes payments to more than 13.3 million poor families on condition they enrol children in school and take part in health programs.

"That has helped to reduce rates of both child poverty as well as inequality," the OECD report said.

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Did China ask Huawei to spy? CEO speaks up

DAVOS - China's controversial telecommunications equipment maker Huawei supports the ruling Communist Party and loves the country, its CEO said Thursday, but stressed Beijing has never asked it to spy on the United States or others.

Ren Zhengfei, a former People's Liberation Army (PLA) engineer, founded the company in 1987 and it has risen to rank among the world's top manufacturers of network equipment.

But his PLA service has led to concerns of close links with the Chinese military and government, which Huawei has consistently denied.

Asked about the issue in a rare public appearance at the World Economic Forum, Ren said through an interpreter: "We are a Chinese company, we definitely advocate (the) Communist Party of China.

"We love our country," he added. "But having said that, we definitely will not compromise the interest of any other country or government. We comply with laws and regulations in every country we do business in."

Asked whether Beijing has ever asked him to use the company's network to tap into US facilities, he responded: "We have never received such a request from the Chinese government."

He also suggested Huawei's technology would not be up to such a task: "There's no way we can possibly penetrate into other people's systems."

The US has long seen Huawei as a security threat, while Washington and Australia have barred it from involvement in broadband projects over espionage fears. The company denies such allegations vigorously.

Last year The New York Times and Germany's Der Spiegel magazine reported the US National Security Agency (NSA) had accessed Huawei's email archive, communications between top company officials and the source code of some of its products.

The allegations were based on documents provided by fugitive NSA contractor Edward Snowden.

But Ren had nothing but positive comments about the US on Thursday, emphasising that its openness was a key reason it has become the world's top power and stressing he has never thought it has treated Huawei unfairly.

Huawei operates in 170 countries and the company says one third of the world's population communicate using its products in some way.

It is the world's second largest network equipment supplier behind Sweden's Ericsson, and has made a large push into consumer products such smartphones in recent years.

Research firm Strategy Analytics ranked Huawei as the world's number five smartphone maker by shipments in the third quarter last year, with a 5.1 percent market share.

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Why Google boss says Internet will 'disappear'

DAVOS - Google boss Eric Schmidt predicted on Thursday that the Internet will soon be so pervasive in every facet of our lives that it will effectively "disappear" into the background.

Speaking to the business and political elite at the World Economic Forum at Davos, Schmidt said: "There will be so many sensors, so many devices, that you won't even sense it, it will be all around you."

"It will be part of your presence all the time. Imagine you walk into a room and ... you are interacting with all the things going on in that room."

"A highly personalised, highly interactive and very interesting world emerges."

On the sort of high-level panel only found among the ski slopes of Davos, the heads of Google, Facebook and Microsoft and Vodafone sought to allay fears that the rapid pace of technological advance was killing jobs.

"Everyone's worried about jobs," admitted Sheryl Sandberg, chief operating officer of Facebook.

With so many changes in the technology world, "the transformation is happening faster than ever before," she acknowledged.

"But tech creates jobs not only in the tech space but outside," she insisted.

Schmidt quoted statistics he said showed that every tech job created between five and seven jobs in a different area of the economy.

"If there were a single digital market in Europe, 400 million new and important new jobs would be created in Europe," which is suffering from stubbornly high levels of unemployment, he said.

The debate about whether technology is destroying jobs "has been around for hundreds of years", said the Google boss. What is different is the speed of change.

"It's the same that happened to the people who lost their farming jobs when the tractor came ... but ultimately a globalised solution means more equality for everyone."

Everyone has a voice

With one of the main topics at this year's World Economic Forum being how to share out the fruits of global growth, the tech barons stressed that the greater connectivity offered by their companies ultimately helps reduce inequalities.

"Are the spoils of tech being evenly spread? That is an issue that we have to tackle head on," said Satya Nadella, chief executive of Microsoft.

"I'm optimistic, there's no question. If you are in the tech business, you have to be optimistic. Ultimately to me, it's about human capital. Tech empowers humans to do great things."

Facebook boss Sandberg said the Internet in its early forms was "all about anonymity", but now everyone was sharing everything and everyone was visible.

"Now everyone has a voice ... now everyone can post, everyone can share and that gives a voice to people who have historically not had it," she said.

Schmidt, who said he had recently come back from the reclusive state of North Korea, added he believed that technology forced potentially despotic and hermetic governments to open up as their citizens acquired more knowledge about the outside world.

"It is no longer possible for a country to step out of basic assumptions in banking, communications, morals and the way people communicate," the Google boss said.

"You cannot isolate yourself any more. It simply doesn't work."

Nevertheless, Sandberg told the assembled elites that even the current pace of change was only the tip of the iceberg.

"Today, only 40 percent of people have Internet access," she said, adding: "If we can do all this with 40 percent, imagine what we can do with 50, 60, 70 percent."

Even two decades into the global spread of the Internet, the potential for opening up and growth was tremendous, she stressed.

"Sixty percent of the Internet is in English. If that doesn't tell you how uninclusive the Internet is, then nothing will," said the tycoon.

The World Economic Forum brings together some 2,500 of the top movers and shakers in the worlds of politics, business and finance for a four-day meeting that ends on Saturday.

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PH is Asia's top performer in gender equality in workplace

MANILA – The Philippines is still among the top 10 best performing countries in promoting gender equality in the workplace, according to the World Economic Forum's 2014 Global Gender Gap report.

The Philippines ranked ninth overall out of 142 economies assessed by the World Economic Forum (WEF), which aims to measure the relative gaps between women and men in health, education, economy and politics.

Compared to ASEAN countries, the Philippines is way ahead of its neighboring nations, with Singapore, Laos and Thailand lagging behind at 59th, 60th and 61st place, respectively.

WEF said the Philippines is also the only country from the Asia-Pacific region that has closed both the educational attainment and health and survival gender gaps.

However, the country dropped eight places to 24 in economic participation, and seven notches down to 17th place in politics.

WEF said the Philippines is part of the top 10 on wage equality for similar work and legislators, senior officials and managers indicators, noting that the country "was led by a female head of state for 16 of the last 50 years."

Cory Aquino was president from 1986 to 1992, while Gloria Macapagal Arroyo served as president from 2001 to 2010.

WEF also noted that since 2008, the Philippines has seen an improvement in its overall score, except in 2014, which was due "to a decrease in the Health and Survival and Political Empowerment subindex scores."

The Philippines is also the second best country after Norway on the ability of women to rise to positions of enterprise leadership indicator, and the country with the highest percentage of firms with female participation in ownership.

The Philippines ranked fifth in last year’s WEF index.

This year, the Nordic countries of Iceland, Finland, Norway, Sweden, and Denmark remained the world’s most gender equal nations.

WEF said that while women are rapidly closing the gender gap with men, inequality at work will likely remain until 2095, adding that in the past nine years, the global gender gap in the workplace barely narrowed.

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ASEAN can be bigger than European Union - WEF

MANILA - The World Economic Forum's (WEF) managing director sees bright prospects for the ASEAN integration in 2015 as long as economic and security issues are managed.

Speaking to ANC on Thursday, Espen Eide said he sees an integrated ASEAN as potentially bigger than the European Union in economic output.

He, however, said it won't be without threats and losers.

"I do believe that the ASEAN prospects are good that there's a lot of will and dynamism. But I think it's also important to understand that it will take some effort to actually get to this economic community. There will be winners and losers, and there should be a shared understanding of the overall benefits of integrating. There's still a long way to go," he said.

"I think it's important that ASEAN become not just a community of political leaders but also of citizens and industries... Countries become more effective and more competitive by working together, by reducing barriers. But there will also be people who will lose in the short run," he added.

Eide, who is also Norway's former foreign and defense minister, does not think maritime disputes should impede countries in the region from getting the full benefits of ASEAN integration.

"It should actually strengthen regional integration, and I think one of the positive initiatives that the ASEAN has taken with China is the attempt to develop a code of conduct for behavior in maritime areas," he said.

On Wednesday, Vietnam and the Philippines forged a strategic partnership and jointly asked China to stop what they believe are its illegal activities in the South China Sea or West Philippine Sea.

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PNoy meets Bill Gates

MANILA, Philippines - President Benigno Aquino met Microsoft chairman Bill Gates at the sidelines of the World Economic Forum in Davos, Switzerland.


Finance Secretary Cesar Purisima and Communications Secretary Ricky Carandang went on Twitter to "tweet" about the "chat" between Aquino and Gates.

Purisima posted a photo of Aquino and Gates smiling for the cameras.

Carandang also posted a photo of Aquino and Gates while they were chatting.

On Thursday, Aquino spoke at the Partnering Against Corruption Initiative event at the World Economic Forum. In his speech, Aquino boasted of his administration's gains in the fight against corruption.

source: abs-cbnnews.com